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Accumulated Other Comprehensive Income (Loss)
 6 Months Ended
Jun. 30, 2013
Equity [Abstract]  
Accumulated Other Comprehensive Income (Loss)

5. Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) are as follows (in millions):

 

           Derivative     Defined        
     Currency     Financial     Benefit        
     Translation     Instruments,     Plans,        
     Adjustments     Net of Tax     Net of Tax     Total  

Balance at December 31, 2012

    $ 132      $ 42      $ (67 )    $ 107   

Accumulated other comprehensive income (loss) before reclassifications

      (213 )      (68 )      —          (281 ) 

Amounts reclassified from accumulated other comprehensive income (loss)

      (25 )      (2 )      —          (27 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Balance at June 30, 2013

    $ (106 )    $ (28 )    $ (67 )    $ (201 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

The components of amounts reclassified from accumulated other comprehensive income (loss) are as follows (in millions):

 

     Three Months Ended June 30,  
     2013     2012  
     Currency     Derivative     Defined            Currency      Derivative     Defined         
     Translation     Financial     Benefit            Translation      Financial     Benefit         
     Adjustments     Instruments     Plans      Total     Adjustments      Instruments     Plans      Total  

Revenue

    $ —        $ (2 )    $ —         $ (2 )    $ —         $ 2      $ —         $ 2   

Cost of revenue

      —          4        —           4        —           5        —           5   

Other income (expense), net

      (25 )      —          —           (25 )      —           —          —           —     

Tax effect

      —          —          —           —          —           (2 )      —           (2 ) 
  

 

 

    

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  
   $ (25 )    $ 2      $ —         $ (23 )    $ —         $ 5      $ —         $ 5   
  

 

 

    

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  
     Six Months Ended June 30,  
     2013     2012  
     Currency     Derivative     Defined            Currency      Derivative     Defined         
     Translation     Financial     Benefit            Translation      Financial     Benefit         
     Adjustments     Instruments     Plans      Total     Adjustments      Instruments     Plans      Total  

Revenue

    $ —        $ (4 )    $ —         $ (4 )    $ —         $ 6      $ —         $ 6   

Cost of revenue

      —          1        —           1        —           11        —           11   

Other income (expense), net

      (25 )      —          —           (25 )      —           —          —           —     

Tax effect

      —          1        —           1        —           (5 )      —           (5 ) 
  

 

 

    

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  
   $ (25 )    $ (2 )    $ —         $ (27 )    $ —         $ 12      $ —         $ 12   
  

 

 

    

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  

The Company’s reporting currency is the U.S. dollar. A majority of the Company’s international entities in which there is a substantial investment have the local currency as their functional currency. As a result, currency translation adjustments resulting from the process of translating the entities’ financial statements into the reporting currency are reported in other comprehensive income or loss in accordance with ASC Topic 830 “Foreign Currency Matters” (“ASC Topic 830”). For the three and six months ended June 30, 2013 and 2012 a majority of these local currencies weakened against the U.S. dollar. This resulted in net other comprehensive loss of $96 million and $213 million, for the three and six months ended June 30, 2013, respectively, upon the translation from local currencies to the U.S. dollar. Due to the sale of a foreign subsidiary during the second quarter of 2013, $25 million of currency translation gains were reclassified from accumulated other comprehensive income (loss) into other income (expense), net in the Consolidated Statement of Income. For the three and six months ended June 30, 2012, this resulted in other comprehensive loss of $121 million and $56 million, respectively.

The effect of changes in the fair values of derivatives designated as cash flow hedges are accumulated in Other Comprehensive Income or Loss, net of tax, until the underlying transactions to which they are designed to hedge are realized. The movement in Other Comprehensive Income or Loss from period to period will be the result of the combination of changes in fair value for open derivatives and the outflow of Other Comprehensive Income or Loss related to cumulative changes in the fair value of derivatives that have settled in the current or prior periods. The accumulated effect was Other Comprehensive Loss of $22 million (net of tax $8 million) and $70 million (net of tax of $27 million) for the three and six months ended June 30, 2013, respectively. The accumulated effect was Other Comprehensive Loss of $53 million (net of tax of $22 million) for the three months ended June 30, 2012 and Other Comprehensive Income of $10 million (net of tax of $4 million) for the six months ended June 30, 2012.